As mentioned I have got this working in a browser (Chrome and IE7) from a freshly created dir file. But for some reason it's not working when added to a large pre existing project. (Works in Director, but not in browser). That's the real mystery to me.

What about the #activateApplication handler - does it fire in a browser in Shockwave?

I've no idea why it wouldn't work in a pre-existing project unless you already have the handler implemented in a #movie script that is called first (a lower member.number), or the script you placed the handler in isn't a #movie script.